The Republicans have more to lose since Obama's reelection was based on class warfare and "TAX THE RICH". The masses voted for that platform a month ago. The Republicans have already alienated a lot of people with their stance of obstruction with the goal of beating Obama over the past two years. That failed. The Republicans also have to move away from Grover Norquist's No-Tax Pledge. That's just plain retarded. While I'm not necessarily in favor of raising taxes, it's stupid for anybody to bind themselves to a pledge that essentially takes a possible course of action completely off the table based on some jack-off's misguided "principle".

As a middle class taxpayer, I also don't like being used as a pawn in the Obama vs. Boehner ******* match. While I certainly don't want my taxes raised, I also don't NEED tax relief.

I think Obama also needs to show that he's willing to compromise While he was slightly better with working across the aisle after the 2010 midterms, he could have done more. His second term will be a complete disaster if he takes his reelection as a "mandate" that gives him free reign to do what he wants. We see how the first two years of his first term turned out, with the abomination of "Obamacare" being shoved down the throat of America.

Posted by bheid408 on 12/5/2012 5:52:00 PM (view original):Should the Republicans give in to Obama on taxes?

or

Should Obama give in to the Repubs on spending cuts?

Neither side wants to budge. What is in it for the side that does?
What will they lose if they do give in?

How will it affect average joe taxpayer?

Don't have time to answer your whole post, but as to the first part, the Republicans, as misguided as they can be (and I'm conservative), did offer to vote today on Obama's plan as written. Reid would have none of it, calling it a "stunt". (Proving, of course that the Obama/Geithner Proposal was just that - a stunt, not to be taken seriously by their own party).

Granted, I understand both parties are playing political games at this point because no one wants to own the results....

It's total dumbassery for people to keep listening to left-wing pundits who shout that because the Republican congress "won't make a deal" everything is their fault and they're going to damage the US credit rating and slow the recovery. The reality is that neither raising taxes nor decreasing spending is good for the recovery, but both are good for the credit rating. Realistically the only way in which the standoff has any meaningful hope of resolving is to find the middle ground, because there just isn't enough influence with either party right now to ride roughshod over the other as often winds up happening...

At the end of the day it's hard to believe that deep down inside Republicans can't find a few tax cuts they're willing to let go of and a few tax increases they can allow or that Democrats can't find a few more places to cut spending than they've conceded to date. The obvious thing is to cut the military budget, but the harsh reality is that isn't likely to happen any time soon.

I believe both partys have legit grounds to stand their ground. Yet, there is plenty of room for compromise. First and foremost we have to realize we have a spending problem in Washington. Dems and Repubs are equally to blame. I agree with Obama that the rich could and should pay more taxes however just raising the rate will not accomplish much if we don't close the loopholes first for getting out of paying the taxes. There are too many ways to deduct for this and for that plus hiding your money in other countries should NOT be allowed. As for spending cuts, there are always way too many pork projects that get added to bills that go through Congress that end up adding millions of dollars that could be saved. Don't tell me there isn't any place where they could be saving money.

Let's take a scenario. Let's say the Repubs give in to Obama and give him tax cuts for the rich without getting any meaningful spending cuts in return. As a Republican why would this be so bad? You are giving the Democratic leader what he wants. The little bit of extra revenue he will get will not cut the deficit by any significant amount and in 4 years Obama and the Dems will look like idiots because what they wanted didn't work. Te Repubs will then be in the drivers seat when re-election time comes again and it should be an easy victory in both houses and the Presidency. They'd be able to blame everything on the Democrats because they gave in to what they wanted.

But, to answer the question, the Republicans have ran on a platform of no tax increases. If they believe that's what got them elected, they can't really give in on that without substantial spending cuts. They're going to want to cut the liberal's entitlement babies which is why they believe they were elected. So they can't budge much on those either.

I think both have a lot to lose by going against what they believe put them in office. Of course, nailing Joe Lunchbucket for 2k more a year in taxes is going to be a pox on both their houses. Maybe the incumbents will be voted out in 2014 and 2016.

The Republicans should give in on some of this. They want to save money for the wealthy and they're standing pat on that when it's not much to give up for the sake of everyone.

Republicans didn't get elected on a platform of no tax increases - they got elected for a variety of reasons, and most of the votes didn't come from the wealthy who are the only ones who would see a tax increase under Obama's plan.

I agree with Obama that the rich could and should pay more taxes however just raising the rate will not accomplish much if we don't close the loopholes first for getting out of paying the taxes.

First, there is no guarantee that raising rates will increase revenues in the first place. In fact, as I've pointed out, and is shown in the numbers (go the IRS and run the numbers yourself - it's easy to find and analyze), lower rates across the board tend to correspond with increasing revenues. It is also shown that the "rich" pay a bigger portion of the share of the larger revenues when the rates are lower. In the current economic/tax climate, which would you rather have? More revenue and a bigger share paid by the rich? Or less revenue with a smaller share paid by the rich? Historical evidence suggests you can't have both.

It is not simple arithmetic that makes this happen. Why? Policy is followed by reaction. In the same way higher taxes on cigarettes is a partial attempt to affect behavior, higher taxes on marginal income will do the same: affect behavior. Every percentage point a tax is raised on the next marginal dollar affects the incentive for one to earn (or spend time or risk money for) the next marginal dollar. Why? Because to earn the next marginal dollar requires more work, and if you're a business owner, it affects return on the risk of your own money. In the extreme case, early in the last century, the highest marginal rate was 91%. There is a huge discourgagement to risk the same thing for 60 cents return on a dollar earned versus 9 cents on a dollar earned. Each person risking capital has their own threshold but the marginal rates absolutely affect whether the money is earned in the first place.

the wealthy who are the only ones who would see a tax increase under Obama's plan.

Not exactly true. Since many of those who would get hit the hardest in rate increases are small businesses whose profits are taxed as income, it comes right off of their bottom line. Since most who own businesses do so because they want to outperfrom the market (a competing destination for risked capital), there is generally a required rate of return on their risk. If taxes go up on them, the only choice they have if they want to make a reasonable reward for their risk is to either 1 - Raise prices on their goods and services (essentially meaning the rate hikes don't hit them - it hits their customers. Unless their customers are all rich, then the tax rate is paid primarily by those are NOT weatlhy) or 2 - Cut costs, which generally means to scale back growth or reduce workforce or benefits to the people they hire. That of course hurts the very people those that want to raise tax rates are supposedly trying to help.

I'll keep saying this because the historical evidence bears this out:

1. Raising tax rates on the weatlhy does not guarantee raising revenue. In fact, historically the converse is true.
2. Raising tax rates on the wealthy does not shift the tax burden to the rich. In fact, historically the converse is true.
3. Raising tax rates on the wealthy does make some people feel better. Those people will likely pay a larger portion of the burden than they think because it really is not intuitive and not simple arithmetic.

It is NOT a zero-sum game. If you want more revenue, don't raise tax RATES. Increase the tax BASE. Allow more freedom. Freedom, not demand (especially artificial demand) is the engine.

Since most who own businesses do so because they want to outperfrom the market (a competing destination for risked capital), there is generally a required rate of return on their risk.

Most small business owners don't think in these terms. Their desire is simply to make money at their business, and concerns they could invest the money in the market instead are never realized as most of their assets aren't liquid enough to make the move to that kind of investment without significant costs that would undermine the entire idea. So the idea of "outperforming the market" is moot except perhaps as a tool to evaluate their profits.

If taxes go up on them, the only choice they have if they want to make a reasonable reward for their risk is to either 1 - Raise prices on their goods and services (essentially meaning the rate hikes don't hit them - it hits their customers. Unless their customers are all rich, then the tax rate is paid primarily by those are NOT weatlhy) or 2 - Cut costs, which generally means to scale back growth or reduce workforce or benefits to the people they hire. That of course hurts the very people those that want to raise tax rates are supposedly trying to help.

I agree with what you are saying here for the most part, but I believe a business should be able to survive upon its own merits. That means if taxes go up, you find a way to make it work or you get out of the business. Y

es, they can do the things you suggest, or they can do what they should, which is to simply accept the fact profits won't be as high with the higher tax rate. If those lower margins don't satisfy them, then perhaps they should do as you suggested earlier: Rather than either of these options you state now (raising prices or cutting costs) they should simply get out of business and invest in the market despite the probable losses they would sustain in order to make the move.

It is NOT a zero-sum game. If you want more revenue, don't raise tax RATES. Increase the tax BASE.

A better tax base comes when the government gives incentives to provide more jobs which are family sustaining with a good wage and benefits. This allows more people to have disposable income to spend, and consumer spending will boost the economy itself, and it would be a cycle leading to better economic times for all. Yet we continue to see policies which promote the hiring of part-time workers as opposed to full time employees and other policies which undermine benefits and earnings. That is the problem.